2004 (1) TMI 398 - SC - Customs

Whether the appellant should be given the extension of time to complete his obligations under the licence? Held that - Appeal allowed. In the instant case if the licence period is extended, as prayed for, no one would suffer any loss and injury whereas the appellant would suffer huge financial loss as well as injury to his reputation and good-will in the foreign market. Thus it is deemed appropriate to direct the authority to extend the period of licence for a period of 3 weeks from the date of the revalidation of the licence.

Summary

Issues:
1. Extension of validity period of an annual advance licence for imports and exports.
2. Application of the principle of promissory estoppel in extending the licence period.
3. Interpretation of Handbook provisions regarding the validity period of import licences.
4. Authority's power to revalidate licences and the circumstances warranting extension.

Analysis:

1. The appellant, an "Export House" engaged in the import and export of garments and textiles, applied for an annual advance licence for import of fabrics and yarn. The licence, issued on 28-3-2001, became operative on 12-4-2001 after an investigation by the enforcement division. The appellant sought an extension of the licence validity till 12-4-2002 due to delayed planning for imports post the licence's operability.

2. The Single Judge, applying the principle of promissory estoppel, directed the extension of the licence period till 12-4-2002. The appellant, relying on Handbook provisions, filed a writ appeal seeking an extension till 30-4-2002. The Division Bench noted the Handbook's clause deeming licences valid until the last day of the month of expiry but refused to interfere with the Single Judge's order, despite the delay in the appellant's representation for extension.

3. The Division Bench observed that the licence's validity, as per the Handbook, should have ended on 31-3-2001, considering the issuance date. Despite the delay in seeking an extension, the Single Judge's order stood unchallenged. The appellant's plea for extension was crucial to avoid financial losses and damage to reputation in the foreign market due to delayed imports.

4. The licensing authority, under Handbook provisions, had the power to revalidate licences for up to six months at a time, not exceeding 12 months from the expiry date. In this case, the appellant's request for a short extension to fulfill existing import orders without causing harm to any party was deemed reasonable. The Court, to ensure justice between the parties, directed the authority to extend the licence period by three weeks from the revalidation date, considering the specific circumstances and potential losses faced by the appellant.

In conclusion, the Supreme Court allowed the appeal, granting the extension of the licence period without imposing any costs, emphasizing the need to prevent substantial financial losses and reputational damage to the appellant in the foreign market.